Addressing threats to health care's core values, especially those stemming from concentration and abuse of power. Advocating for accountability, integrity, transparency, honesty and ethics in leadership and governance of health care.

Tuesday, May 31, 2016

What is euphemistically referred to as an "IT system error" is, in reality, the mass delivery of a grossly defective medical device adversely affecting hundreds of thousands of patients. I'm surprised not to see that other kindly euphemism, "glitch" (http://hcrenewal.blogspot.com/search/label/glitch):

The regulator says that means that ‘a limited number’ of patients may be affected, and the risk to patients is ‘low’.

At best, it's good that only a "limited number" of patients were "affected." I guess they feel they can justify a "limited number" of patient harms for the glory of a medical Cybernetic Utopia.

At worst, how do "the regulators" know exactly who was affected? Answer: they don't and this is boilerplate BS meant to CYA.

But Pulse has learnt that the 2,500 practices using SystmOne are having lists sent to them of around 20 patients per partner who may need to be taken off statins, or be put on them, after their risk is recalculated.

Not to mention the risks of not being on a statin if you truly need one.

And this number could increase if a practice provides NHS Health Checks routinely. In addition, the lists being sent to practices only go back to October 2015, but practices will be sent further lists potentially dating back to 2009 over the next few weeks.

Wait! The "regulators" said that ‘a limited number’ of patients may be affected. They are clairvoyant, I would imagine. Maybe one of them is Harry Potter?

The "regulators", who have the same powers as the man-wizard above, know through clairvoyance that only a limited number of people were affected, and risk to them low.

A statement from MHRA to Pulse said: 'An investigation has been launched into a digital calculator used by some GPs to assess the potential risk of cardiovascular disease (CVD) in patients.

'We are working closely with the company responsible for the software to establish the problem and address any issues identified.

The problem is incompetence and negligence. One wonders what testing was performed before this was unleashed on the public in the UK.

TPP told Pulse they were working to address the ‘Clinical Safety Incident’ and that the QRISK calculator was provided as an advisory tool to support decision making. They added they were working to ensure the issues were addressed and GPs are informed of affected patients ‘as soon as possible’.

‘Clinical Safety Incident’ - what a wonderful euphemism for "healthcare IT debacle."

Deputy chair of the GPC’s IT subcommittee Dr Grant Ingrams told Pulse it would be ’loads of work’ to sort out.

He said: ‘It affects everyone who has had a QRISK, and SystmOne are sending out messages to say “look at these patients”. But then you have to see if the change is significant, and whether you would have made a different decision at the time, or put them on a different treatment’

It will probably be more work than if such a system had never been constructed.

Dr Ingrams said: ‘There’s potential harm both ways…What happens when a patient who had been of a high risk and this hadn’t been identified and they’ve now had a stroke or heart attack? ‘Similarly if someone had a low risk and they’ve been put on a statin and had a side-effect who’s responsible? That’s the clinical risk.’

Answer: the company that produced this grossly defective software, and those "regulators" who allowed it on the market without independent and thorough testing, are responsible.

Dr William Beeby deputy chair of the GPC’s clinical and prescribing subcommittee, said the bug ‘certainly had the potential to impact on patient confidence’ and this could create even more work ... ‘It’s the tool we’ve been told to use. So if the tool is inaccurate,
then you start to lose confidence and the doctors will then lose
confidence as well.’

However, it seems, hyper-enthusiast overconfidence in health IT, including that of the "regulators", would not be injured even if bad health IT caused more casualties than the bombings and V2 attacks suffered by the UK in WW2.

After the health IT debacles involving billions of wasted pounds in the UK, perhaps the UK's "regulators" need to look upon health IT as fondly as this piece of technological wizardry.

A TPP spokesperson told Pulse: 'TPP is dealing with the Clinical Safety Incident involving the QRISK2 Calculator in SystmOne. The tool is intended to support GPs in assessing patients at risk of developing cardiovascular disease and in developing treatment plans. The QRISK2 Calculator is presented within SystmOne as an advisory tool.

"Advisory tool"? That the doctors can safely ignore? Hogwash.

’We are actively working to ensure the issues identified are addressed and to ensure that clinicians are informed of any patients that may have been affected as soon as possible.’

Nanaimo doctors say electronic health record system unsafe, should be shut down

By Cindy E. Harnett
Victoria Times Colonist
May 27, 2016

Implementation of a $174-million Vancouver Island-wide
electronic health record system in Nanaimo Regional General Hospital —
set to expand to Victoria by late 2017 — is a huge failure, say senior
physicians.

Who cares what they say? They're just doctors, so sayeth the imperial hospital executives..

After a year of testing, the new paperless iHealth
system rolled out in Nanaimo on March 19. Island Health heralds the
system as the first in the province to connect all acute-care and
diagnostic services through one electronic patient medical record, the
first fully integrated electronic chart in the province.

Doctors said the system is flawed —
generating wrong dosages for the most dangerous of drugs, diminishing
time for patient consultation, and losing critical information and
orders.

“The whole thing is a mess,” said a senior physician. “What you type into the computer is not what comes out the other end.

“It’s unusable and it’s unsafe. I’m surprised they haven’t pulled it. I’ve never seen errors of the kind we are now seeing.”

Doctors are so concerned, they want Island Health to suspend the implementation.

“Take
it away and fix it and test it before you bring it back — stop testing
it on our people,” said one doctor. “Why wasn’t this introduced in
Victoria first? If they went live in Victoria first, they would have a
riot.”

(Is there anything unclear there, I ask?)

SHUT UP DOCTORS. IT''S PERFECTLY SAFE, sayeth the administration.

The doctors, who fear reprisals, spoke to the Times Colonist on condition of anonymity.

If doctors did not fear reprisals I'd have a full time job writing on EHR debacles. I could almost have one now.

The
$174-million system started with a 10-year, $50-million deal for
software and professional services signed in 2013 with Cerner
Corporation, a health information technology company headquartered in
Kansas City. Thus far, the company has been paid close to $12 million.
The remaining $124 million is to be spent by Island Health for hardware,
training and operating the system.

The system is being used in
Nanaimo’s hospital, Dufferin Place residential care centre (also in
Nanaimo), and Oceanside Health Centre in Parksville.

Since March
19, mobile touch-screen computer console carts have been rolling around
hospital hallways. Voice-recognition dictation software immediately
transcribes a doctor’s verbal notes into a patient’s electronic record,
and scanners track each bar-coded patient bracelet around the hospital. But doctors complain the new technology is slow, overly complicated and inefficient.

Today's clinical IT is needlessly and blindingly complex. But hospital executives are, in my increasing view, too ignorant to recognize the necessity of simplicity in critical functions such as clinical medicine. Their jobs are child's play in comparison. (I should know; I once was a health IT executive after having practiced medicine for a number of years.)

“The
iHealth computer interface for ordering medications and tests is so
poorly designed that not only does it take doctors more than twice as
long to enter orders, even with that extra effort, serious errors are
occurring on multiple patients every single day,” wrote one physician at
the Nanaimo hospital.

In view of current warnings and that which is known, and has been known for many years from the literature about bad health IT, each and every adverse outcome of injury that occurs represents hospital executive gross negligence:

Gross negligence is a conscious and voluntary
disregard of the need to use reasonable care, which is likely to cause
foreseeable grave injury or harm to persons, property, or both. It is
conduct that is extreme when compared with ordinary Negligence, which is a mere failure to exercise reasonable care. http://legal-dictionary.thefreedictionary.com/gross+negligence

I leave it to the reader to classify patient deaths.

“Tests are being delayed. Medications are being missed or accidentally discontinued.”

My mother and other patients in whose litigation I have provided informatics expertise were injured and/or died from precisely that type of mistake.

There
are also complaints about the pharmacy module of Cerner’s integrated
system — the only joint build between Island Health and Cerner.

iHealth
implementation staff brought in to input orders for physicians this
week entered eight drug mistakes on one day and 10 on another, while
there were no mistakes in the paper orders, doctors said. “If the
experts can’t enter it correctly, what is the average Joe going to do?”
one doctor said.

Suffer, and take on all the liability, of course.

Another problem, they said, is patients’ drug orders disappearing from the system.

... But Island Health spokeswoman Antoniette O’Keeffe said the system is safe and doing what it’s intended to do.

To hell with the doctors concerns and with the patients.

“We are not going back to paper,” she said. “We can’t go back to paper. We don’t have the mechanics to go back to paper.”

I'll be generous about the stupidity represented by that statement. What she means is, we've jsut blown tens of millions of dollars on computers. We'd get out asses kicked by the Board if we admitted we blew it and went back to paper.

Island
Health acknowledges that documentation for staff doing
emergency-department patient intake was a challenge, noting Nanaimo is
the busiest emergency department on the Island.

A mere "challenge." How about "was not possible in a 24 hour day?"

Nanaimo has some
of the top physicians in the country and “we respect the feedback they
are giving us, and so we are listening to them and we are tweaking and
modifying the system,” O’Keeffe said.

We respect their feedback. They say it should be shut down, but "the system is safe and doing what it’s intended to do."

More staff have been added
to speed up admissions and others are working around the clock in the
intensive-care and emergency departments to input handwritten physician
orders into the system, O’Keeffe said.

Cerner is working with Island Health staff, “and they’ll be here until we get this fully implemented,” O’Keeffe said.

Island
Health credits the system’s electronic warnings for catching about 400
human-caused medication errors and conflicts at three sites, saying it’s
a sign that the system is working. It will produce a warning, for
example, if the dosage is too high for a patient’s weight, if the drug
is not appropriate for a particular disease or if there’s a drug
conflict.

Across the country, thousands of medication mistakes are
made daily due to human error, “and this system is designed to catch
them,” O’Keeffe said.

Doctors respond that so many irrelevant flags pop up, it creates confusion, while the computer loses or duplicates drug orders.

Ms. O'Keefe and her administration are obviously blissfully unaware of how health IT can cause medication errors en masse impossible with paper, e.g., "Lifespan (Rhode Island): Yet another health IT 'glitch' affecting thousands", http://hcrenewal.blogspot.com/2011/11/lifespan-rhode-island-yet-another.html. Of course, many hospital executives are ill-informed, lacking the curiosity of the average scientist or physician.

The
system was a decade in the making for Island Health. Twenty-three
clinical teams were involved in developing various components and there
was user-group testing, modifications and feedback, O’Keeffe said.
Training has gone on for the last year, she said. “You can only bring a
system so far and then you have to put it in a real environment to test
it.”

At best - test it - yes, on unsuspecting human subjects known as patients, doctors and nurses. The ones who are harmed and the ones who die are worthy human sacrifice for the glory of computing, eh, Ms. O'Keefe?At worst - what is wrong with this industry that each and every installation of this technology is an experiment?

Is it that the technology has exceeded the intellectual horsepower of available personnel? In my experience that has seemed to be the case.

By the end of the implementation, it’s expected family
doctors will also be able to access patient files started in acute-care
settings. Island Health is working on that component now, O’Keeffe said. Once
the system is working smoothly in Nanaimo, it will be installed in the
north Island and then Victoria hospitals in 12 to 18 months, O’Keeffe
said.

It is grim, written by a doctor under a pseudonym (Dr. Winston Smith is the pseudonym for a doctor in Nanaimo - that says much about fear of retaliation):

One
health record. Making care delivery easier for health-care providers.
Safer health care. These are the claims Island Health has made publicly
for its new electronic health-record system iHealth, introduced
initially at Nanaimo Regional General Hospital in March and intended to
roll out across Vancouver Island in the coming months.
These are goals physicians share — many of whom enthusiastically use
electronic records in their clinics. Despite “bumps in the road,” Island
Health claims the implementation of the system is going well.
But these claims are untrue. iHealth does not provide a single health
record: It offers no less disjointed and poorly accessible a collection
of patient information in differing programs and sites than the previous
system.
The system is cumbersome, inefficient, not intuitive — and not simply
because it is a new system, but because of its very nature. It’s like
trying to make a DOS-based computer work like an Apple or Windows-based
system: You can perform many of the same functions, but it is slow,
takes multiple steps and is inefficient.
Even the youngest generation, who have grown up with computers, and
those with computing science degrees can’t make it work effectively.
The system’s ordering function is faulty and requires multiple separate
steps and choices to order a simple medication: A processing issue
safety experts know is highly likely to cause error.
And the system sometimes makes default changes in medication orders
without the knowledge of the ordering physician. Single orders for
medications disappear from the record, so that duplicate orders are
initiated by unknowing doctors.
The consequence of these problems is that hospital-based care delivery
is slower, more inefficient, more prone to error. Health-care providers
are found interacting with their mobile computer monitors in already
overcrowded hallways rather than providing direct patient care.
Nurses and doctors have less of a holistic appreciation of their
patients and their illnesses because of the disjointed complexity of the
electronic record rather than the simple navigability of the previous
paper record and charting.
And communication with the computer system has supplanted direct
discussion between health-care team members: Like trying to manage
complex illnesses through text messages.
Health-care delivery is slower, so surgical operations are cancelled or
delayed and patients leave the emergency department without being
assessed; patients are not seen in a timely fashion or at all by
specialists; medication errors are regular, so patients are medicated
inappropriately or even overdosed; and some of our most experienced and
valued health-care providers opt for early retirement or leave rather
than continue the frustration and moral distress that this system has
generated.
And the effect of iHealth is not restricted to the hospital, as some
specialists have reduced their outpatient service because of the
increased workload iHealth has caused.
In short, health care is not easier or better. The quality of care is
worse and access is reduced. Improvements can be made and have been, but
the system is fundamentally flawed. The impact on work efficiency and
quality will never return to previous levels — a fact even the Island
Health iHealth “champions” acknowledge.
Worse, iHealth is unsafe and dangerous. Medicine strives to be
evidence-based, but there’s no evidence electronic record systems
improve quality of care, and plenty of evidence they do the opposite —
particularly this one.
Doctors have expressed their concerns to Island Health. Rather than
suspending the system, the health authority’s response has been simply
to delay its rollout beyond Nanaimo. It’s OK to let our community suffer
while they tinker.
Dr. Brendan Carr, the CEO of Island Health, tells us he’ll “do whatever
it takes to make this work,” even while continuing to risk worsening
quality of care and expending more of our taxpayer dollars — $200
million so far, a fraction of which applied to delivery of health-care
services could provide inordinately better health-care outcomes than any
electronic record can do.
The medical community has finally taken matters into our own hands in
the interests of patient safety, quality of care and access. A number of
departments are refusing to continue using the system and instead
returning to the previous one.
Why does Island Health not withdraw this system? In sum, they’ve spent a
lot of taxpayers’ dollars on iHealth, a product of Cerner, which has
been sued by hospital systems in the United States.
And as with many such systems, the objective has not been better
patient care, but has been more Orwellian: Improved administrative data
and control — no wonder Island Health is loath to give it up.
Well, Dr. Carr, the patient should be paramount. I and my family and my
community are not expendable. No electronic record system should be
introduced that will not explicitly improve health care, patient safety
and access.
Any deterioration in health care is not an acceptable outcome. Suspend
the iHealth experiment. Stop wasting taxpayer dollars. Sue for our money
back for having been sold a lemon (as other jurisdictions have done).
Spend our tax dollars on services, infrastructure and equipment that will improve health care, not make it worse.Dr. Winston Smith is the pseudonym for a doctor in Nanaimo.
- See more at:
http://www.timescolonist.com/opinion/op-ed/comment-new-computer-system-a-detriment-to-health-care-1.2264274#sthash.rWwQcJZA.dpuf

... The system is cumbersome, inefficient, not intuitive — and not simply because it is a new system, but because of its very nature. It’s like trying to make a DOS-based computer work like an Apple or Windows-based system: You can perform many of the same functions, but it is slow, takes multiple steps and is inefficient.

Even the youngest generation, who have grown up with computers, and those with computing science degrees can’t make it work effectively.

The system’s ordering function is faulty and requires multiple separate steps and choices to order a simple medication: A processing issue safety experts know is highly likely to cause error.

And the system sometimes makes default changes in medication orders without the knowledge of the ordering physician. Single orders for medications disappear from the record, so that duplicate orders are initiated by unknowing doctors.

Deadly.

The consequence of these problems is that hospital-based care delivery is slower, more inefficient, more prone to error. Health-care providers are found interacting with their mobile computer monitors in already overcrowded hallways rather than providing direct patient care.

This was not what the pioneers intended.

Nurses and doctors have less of a holistic appreciation of their patients and their illnesses because of the disjointed complexity of the electronic record rather than the simple navigability of the previous paper record and charting.

That sums up a major problem with today's health IT well.

The medical community has finally taken matters into our own hands in the interests of patient safety, quality of care and access. A number of departments are refusing to continue using the system and instead returning to the previous one.

This type of revolt, showing who really owns the hospital, needs to become commonplace.

Why does Island Health not withdraw this system? In sum, they’ve spent a lot of taxpayers’ dollars on iHealth, a product of Cerner, which has been sued by hospital systems in the United States.

And as with many such systems, the objective has not been better patient care, but has been more Orwellian: Improved administrative data and control — no wonder Island Health is loath to give it up.

Indeed.

The CEO is himself a physician:

Well, Dr. Carr, the patient should be paramount. I and my family and my community are not expendable. No electronic record system should be introduced that will not explicitly improve health care, patient safety and access.

This anonymous doctor needs to speak to my mother, who I visited yesterday along with my father, on U.S. Memorial Day - at the cemetery after her encounter with bad health IT.

Thursday, May 26, 2016

Probably because it involved the favorite American sport, the controversy about the risk of concussions to professional National Football League (NFL) players, and how the NFL has handled the issue is very well known. A recent article in Stat, however, suggested that one less well known aspect of the story overlaps some issues to concern to Health Care Renewal.

Allegations that a Prominent Physician and NFL Official Tried to Influence the NIH Grant Review Process

The article began,

Dr. Elizabeth Nabel,
president of Boston’s Brigham and Women’s Hospital [BWH] and one of the
nation’s most prominent medical executives, was part of a National
Football League effort to 'steer funding' for a landmark concussion
study away from a group of respected brain researchers, according to a
congressional committee report that was sharply critical of the league.

The report found that the NFL 'inappropriately
attempted to influence' the National Institutes of Health’s [NIH] grant
selection process.

Dr Nabel, in fact, not only runs the BWH, a renowned teaching hospital and major component of Partners Healthcare, but also serves as the "chief health and medical advisor" to the NFL. Anyone who has followed even a bit of the media coverage about the NFL and concussions affecting football players knows that the NFL could be negatively affected by any more research that associates playing professional football, concussions, and the adverse effects of concussions.

The Stat article chronicled the intricate communications between Dr Nabel and the NIH as documented by a report from the Democratic staff of the House Committee on Energy and Commerce.

It cited a series of communications between NFL representatives,
including Nabel, and officials of the NIH, and a foundation that accepts
gifts from private donors to support NIH research. The discussions
began after the NIH decided last year to award a $16 million grant to a research team led by Dr. Robert Stern of Boston University — but before the award was publicly announced.

The money for the grant was to come from a donation pledged by the
NFL to the Foundation for the National Institutes of Health, and league
officials say they were concerned about aspects of Stern’s group and the
proposed study.

Research by Stern’s team and BU colleagues has helped establish a link between football and chronic traumatic encephalopathy,
long-term brain damage that’s been observed in a growing number of
athletes, including former NFL players, who suffered repeated head
injuries.

The implication seems to be that this research group might be counted on to fearlessly pursue research even if the outcomes suggested that playing football might lead to adverse medical effects, which might not be so good for the NFL's interests. So,

Nabel, who knows the NIH well from her 10 years working as a
high-level manager in the agency, sent two emails to Dr. Walter
Koroshetz, director of the National Institute of Neurological Disorders
and Stroke [NINDS], according to the report. That’s the NIH branch that was
awarding the grant.

In one email on June 23, 2015, she wrote, 'I am taking a neutral
stance here,' while noting a concern about a potential conflict of
interest: members of the NIH grant review panel had coauthored papers
with two researchers that she had heard might be receiving the grant —
Dr. Ann McKee and Dr. Robert Cantu of BU.

Later that day, she wrote Koroshetz that 'a Dr. Stern, who may also
be with this group, has filed independent testimony in the NFL/Players
Association settlement.'

Indeed, Stern was critical of how the settlement would be
administered, pointing out flaws with the neuropsychological tests that
the league proposed using to determine how to compensate injured
players.

Notwithstanding that Dr Nabel had an obvious conflict of interest herself: she worked for the NFL. In any case,

'I hope this group is able to approach their research in an unbiased manner,' Nabel’s email continued, the report says.

Nabel sent Stern’s testimony to Koroshetz, according to the report.

'My sole objective,' Nabel said in her statement, was to ask her
former NIH colleagues to 'ensure there were no conflicts of interest
among grant applicants.'

The NIH found no conflicts involving the grant review panel and stuck
with its decision to award the grant to the Stern group. It ended up
using internal funds, not the NFL money, to pay for the grant.

The NIH told STAT it agrees with the 'characterization of events in the report.'

An Affront to the Sanctity of the Grant Review Process?

Although Dr Nabel and the NFL asserted that they acted appropriately at all times, neither the committee staff nor one very prominent ethicist agreed,

The committee report said that Koroshetz disagreed ..., and said he was aware of no other instance where a
donor raised objections to a grantee prior to the issuance of a notice
of grant award.'

'The NFL’s characterization of the appropriateness of its actions
suggests a lack of understanding of the importance of the NIH’s
independent peer review process,' the committee report states.

Nabel’s spokeswoman said Koroshetz never told Nabel her actions were
inappropriate. 'In fact, all of their interactions were very collegial
and cordial,' she said.

I will interject that the question was not whether Dr Nabel was hostile or bullying, but was whether she tried to inappropriately influence the grant review process. So also,

Arthur Caplan, a professor of bioethics at New York University, said
Nabel’s actions, as described in the report, risk harming Nabel’s
reputation and that of the Brigham. 'When she did anything to try to
shape the selection of investigators or challenge the objectivity' of
the grant selection process, he said, 'she had to know that that was 100
percent inappropriate, 100 percent unacceptable.'

Having served on numerous NIH and Agency for Healthcare Research and Quality (AHRQ) review committees (known as "study sections"), let me add some context at this point. Study section members must meet rigorous standards for freedom from conflicts of interest. They also fiercely guard their independence. The grant reviews they construct are supposed to be entirely about the scientific, clinical and public health merit of the proposals, and the scores they give proposals are the most important determinants of whether it gets funding. Funding decisions are actually made by agency staff and advisory boards, but are supposed to depend only on the reviews and the general priority of the proposals' topics. Nobody - I repeat, nobody - outside of this process is supposed to influence the funding decisions.

So the notion that big wigs from big outside organizations with vested interests in how a particular research project might turn out were communicating with top NIH officials about grant proposals, and that the officials allowed them to continue to communicate, and allowed even the chance they would be influenced by their communication strikes this old reviewer, to quote Dr Caplan, as "100 inappropriate, 100 percent unacceptable."

Did the Revolving Door Enable the Attempt to Influence NIH Grant Review?

Not directly discussed in the Stat article, however, was why Dr Koroshetz, director of NINDS, was willing to accept, if not agree with Dr Nabel's communications. The article did note that Dr Nabel was a former "high-level manager" at the NIH. In fact, according to her official Brigham and Womens' Hospital biography, Dr Nabel was director of the US National Heart, Lung and Blood Institute from 2005-2009. She became CEO of the BWH in 2010. Thus, she was a former top NIH leader who once held a rank commensurate with that held by Dr Koroshetz.

But wait, there is more. Also according to her official BWH biography, Dr Nabel's husband is one Gary Nabel, now the chief scientific officer at Sanofi. Dr Gary Nabel, in turn, was Director of the Vaccine Research Center at the
National Institute for Allergy and Infectious Diseases (NIAID), another NIH institute, through
2012, but then according to Science, became chief scientific officer at Sanofi. So Dr Nabel's husband was also a high-ranking NIH leader, although apparently not as high-ranking as his spouse and the NINDS director with whom she communicated.

Thus it appears that maybe Dr Nabel had outsized influence at the NIH and on the NINDS director because she was a former NHLBI director, and the spouse of a former high-ranking NIAID leader. Her attempts to influence the NIH grant application process therefore appear to be a possible manifestation, albeit delayed, and partially at one spousal remove, of the revolving door pheonomenon.

The literature makes clear that the revolving door process is a source of valuable political connections for private firms. But it generates corruption risks and has strong distortionary effects on the economy, especially when this power is concentrated within a few firms.

This case suggests how the revolving door may enable certain of those with private vested interests to have excess influence, way beyond that of ordinary citizens, on how the government works.

Worse, this case also suggests how it seems that the country is increasingly run by a cozy group of insiders with ties to both government and industry. In fact, just a little more digging reveals that a key player in this case has even more ties to big private health care organizations. According to ProPublica, in the last three months of 2014, Dr Elizabeth Nabel received $26,070 from Medtronic, mainly for food, travel and lodging, but which included $8572 for "promotional speaking/ other." In 2015, she was appointed to the board of directors of Medtronic, despite not having previously owned any Medtronic stock, according to the company's 2015 proxy statement. Also in 2015, she was appointed to the board of directors of Moderna Therapeutics. Her husband, as noted above, now works as chief scientific officer for Sanofi.

So, as we have said before.... The continuing egregiousness of the revolving door in health care shows
how health care leadership can play mutually beneficial games,
regardless of the their effects on patients' and the public's health.
Once again, true health care reform would cut the ties between
government and corporate leaders and their cronies that have lead to government of, for
and by corporate executives rather than the people at large.

Video addendum: the beginning of "League of Denial" from PBS Frontline

Friday, May 20, 2016

The problem of ever rising, amazingly generous pay for top health care managers is a frequent topic for Health Care Renewal. We have suggested that the ability of top managers to command ever increasing pay uncorrelated with their organizations' contributions to patients' or the public's health, and often despite major organizational shortcomings indicates fundamental structural problems with US health, and provides perverse incentives for these managers to defend the current system, no matter how bad its dysfunction.

In particular, we have written a series of posts about the lack of logical justification for huge executive compensation by non-profit hospitals and hospital systems. When journalists inquire why the pay of a particular leader is so high, the leader, his or her public relations spokespeople, or hospital trustees can be relied on to cite the same now hackneyed talking points.

It seems nearly every attempt made to defend the outsize compensation
given hospital and health system executives involves the same arguments,
thus suggesting they are talking points, possibly crafted as a public
relations ploy. We first listed the talking points here, and then
provided additional examples of their use.
here, herehere,here, here, and here, here and here.

They are:
- We have to pay competitive rates
- We have to pay enough to retain at least competent executives, given how hard it is to be an executive
- Our executives are not merely competitive, but brilliant (and have to be to do such a difficult job).

Yet as we discussed recently, these talking points are easily debunked. Additionally, rarely do those who mouth the talking points in support of a particular leader provide any evidence to support their applicability to that leader.

Bit at least most journalists who inquire into hospital executive compensation make an attempt to be "fair and balanced" by also quoting experts who question the talking points.

At first blush, the leaders of area hospitals are handsomely
compensated. But a Reading Eagle analysis finds that their compensation
is in line with hospital administrators in other areas.

The author was not shy about documenting the munificent pay of local hospital executives, seven of whom received more than $1 million as documented by their organizations' most recent financial reports.

Harold Paz, CEO of Hershey Medical Center (Penn State University) topped the list in 2014, at $1.57 million.
+++
Second was Thomas E. Beeman, former president and CEO of Lancaster General Health, at $1.5 million.
+++
Third was Clint Matthews, president and CEO of Reading Health System, at
$1.44 million in 2014, the most recent year information was available.

Then,

Fourth place in total compensation went to Ronald W. Swinfard,
trustee and CEO of the Lehigh Valley Health Network, at $1.32 million in
2014.

Fifth place in total compensation was Kevin Mosser,
director and CEO, WellSpan Health at Ephrata Community Hospital, at
$1.29 million.

Eleventh was John Morahan, chair, president and CEO, Bornemann Health Corp. and
St. Joseph Regional Health, at $841, 246. Bornemann is an affiliate of
St. Joseph Regional Health, and compensation came from Catholic Health
Initiatives.

Parroting the Talking Points

But the public should fear not, because, as the talking points say....

We have to pay competitive rates

This was invoked early in the article.

The Reading Eagle review also found that leaders of hospitals
in Berks County are compensated in line with their counterparts at other
medical centers in Pennsylvania.

Also,

Overall, the compensation of medical nonprofit leaders in Berks County is on par with leaders of similar locations elsewhere, said Chester Mosteller, founder and president of Mosteller and Associates, a human resource professional services firm in Reading.

We have to pay enough to retain at least competitive executives

To support both the first and this talking point, the article cited a local expert,

Nonetheless, people are sometimes surprised at high compensation levels
at nonprofit hospitals, said Tish Mogan, standards for excellence
director at the Pennsylvania Association of Nonprofit Organizations in
Harrisburg. But, Mogan noted, if the leaders of nonprofit hospitals were
not well compensated, they could be poached by for-profit medical
centers.

'They have to be competitive,...

Doubling down, the article also cited "Anna Valuch, director of marketing for Reading Health System," whose CEO, her boss, pulled down $1.44 million. She said

the system's board of directors takes seriously its responsibilities in terms of creating an executive compensation plan that is fair, competitive and consistent with the system's mission to provide the highest quality health care.

Later, the reporter quoted Ms "Cindy Bergvall, co-owner of accounting firm Bee Bergvall and Co in Bucks County and its affiliate, the Catalyst Center for Nonprofit Management," as saying

nonprofit health care organizations are competing with for-profit organizations for talent, so they must offer competitive wages.

Our executives are brilliant

Ms Morgan immediately segued into a claim that executives

have to make sure that somebody's in charge that has the capability to
make sure that, if I'm on that procedure table, things are in place to
take care of me,

Mr Mosteller had a different version of the brilliance argument.

'It's been extremely challenging with the Affordable Care Act and Medicare, and that all results in some very big challenges within the health care arena,' he said. 'It is by no means an easy nonprofit to run and manage. It's become increasingly complex to operate and fulfill your mission in those environments.'

Similarly, "J Andrew Weidman, chairman of the board of directors for Penn State Health St. Joseph," put all three talking points into one sentence,

'To be in the best position to recruit and retain vital and talented employees, we must pay competitive wages,' Weidman said.

So did "Brian Downs, director of media relations for Lehigh Valley Health Network," who worked for CEO Ronald W Swinfard, who pulled down $1.32 million,

'To attract and retain the highest caliber health care professionals needed to sustain the quality of care LVHN provides to our community, and to oversee the operation of a nearly $2 billion organization, we must offer compensation that is competitive with organizations we compete with for talent in the job market,' Downs said.

Note that several of these experts/ commenators worked directly for the very well compensated hospital system CEOs of interest, and the others apparently worked for firms that got financial support from these CEOs' hospital systems.

No Questions Asked

While the Eagle quoted multiple proponents of high executive pay repeating all the talking points, the reporter apparently did not challenge any of them to justify any of the talking points in the context of interest. In particular, no one provided any evidence that any of the particular executives are so brilliant, or as the article implies, why ALL local executives are brilliant. How can there not be a single average one in the bunch?

In fact, a quick Google search reveals reasons to questions the brilliance of at least some of them. For example, Hershey Medical Center, whose CEO was the highest paid of the group, has proposed a controversial merger which is the subject of strong opposition by the US Federal Trade Commission (FTC). (See articles in Modern Healthcare and PennLive. Per Modern Healthcare, the FTC is claiming that the merger would lead to "higher prices and diminished quality [of care]." Especially given that the FTC seemingly has a high threshold to challenge a hospital system merger, its opposition certainly suggests questions about current hospital management. Also, Lancaster General Health, whose CEO was the second best paid of the group, had to pause a big expansion project because of cost overruns (see this article in Lancaster Online), and suffered a major outage of its electronic health record (EHR) system (see this article in Lancaster Online).

Yet the Reading Eagle reporter did not raise these incidents, nor question anyone about the supposed brilliance of the leaders at the institutions that suffered them.

Furthermore, many of the points made on behalf of high executive pay raised obvious questions that were not asked. For example, Ms Morgan was not asked whether any executives actually have been recently "poached." Ms Bergvall was not asked to name the for-profit organizations with which the hospital systems was competing for talent. Strikingly, Ms Bergvall also was not asked to justify the assertion that it is the responsibility of hospital managers, not physicians, to make sure that "when I am on the procedure table, things are in place to take care of me."

Even more strikingly, Ms Bergvall was apparently not questioned further after she suggested that CEOs may command more pay simply because they may feel entitled to a big dollop of all the money flowing throught he health care system

when nonprofit organizations bill for services, like hospitals do, they usually have the financial resources to compensate people well.

'In the health care industry, you have an income stream that allows you to pay better,' Bergvall said.

Of course, many of the media reports on high executive compensation in health care do not report any cross-examination of its supporters. Perhaps these advocates refused to respond to such questions, or the reporters felt too intimidated to challenge them.

But nearly all articles that try to delve into executive compensation at all at least quote some experts who are skeptical of current practices. And there are real reasons to be skeptical. As we discussed here, there is a strong argument that huge executive compensation is more a function of executives' political influence within the organization than their brilliance or the likelihood they are likely to be fickle and jump ship even bigger pay. This
influence is partially generated by their control over their
institutions' marketers, public relations flacks, and lawyers. It is
partially generated by their control over the make up of the boards of trustees
who are supposed to exert governance, especially when these boards are
subject to conflicts of interest and are stacked with hired managers of
other organizations.

This article included no such attempts at balance. So it ended up more like propaganda for managers' current privileged position in health care than journalistic inquiry. It is sad to see reporting about important health policy issues
devolve into propaganda to support the status quo, and those who
personally profit the most from it. But perhaps those who work at the
Reading Eagle hesitate to offend those who are making the most from
the current system. It appears that the newspaer is owned by the
Reading Eagle Company, and this, in turn is owned by the Barbey family,
which according to Politico also

We will not make any progress reducing current health care dysfunction if we cannot have an honest conversation about what causes it and who profits from it. In a democracy, we depend on journalists and the news media to provide the information needed to inform such a discussion. When the news media becomes an outlet for propaganda in support of the status quo, the anechoic effect is magnified, honest discussion is inhibited, and out democracy is further damaged.

True health care reform requires ending the anechoic effect, exposing the web of conflicts of interest that entangle health care, publicizing who benefits most from the current dysfunction, and how and why. But it is painfully obvious that the people who have gotten so rich from the current status quo will use every tool at their disposal, paying for them with the money they have extracted from patients and taxpayers, to defend their position. It will take grit, persistence, and courage to persevere in the cause of better health for patients and the public.

Sunday, May 15, 2016

The US Internal Revenue Service mandates disclosure of the membership of boards of trustees of non-profit corporations. Nonetheless, as reported by New Brunswick (NJ) Today, the leadership of the newly formed RWJ Barnabas Health system has been doing their best to keep the membership of its board of trustees secret.

The new organization created to function as the state's largest hospital chain is refusing to tell the public who serves on their Board of Trustees,...

To elaborate,

The two hospital networks officially combined to form a new conglomerate, the state's second largest employer, in a deal that was finalized on March 31.

But since then, the new group has refused to identify its board members, after stalling for nearly two weeks.

'Thank you very much for your interest. It is a policy at RWJBarnabas Health not to share the names of the Board of Trustees" read a peculiar April 12 email response from an anonymous address affiliated with Barnabas, B4@barnabashealth.org.

The anonymous email address has not responded to follow up inquiries from this newspaper, including one urging them to make the 'smart choice' and 'be transparent.'

This goes against at least the spirit of the law.

'If the organization has been recognized by the IRS as tax-exempt under one of the subsections under 501(c), there are a number of documents that organizations must make available that would include board lists,' said the leader of the Center for Non-profits.

The initial application, and the three most recent annual filings, must be made available for inspection or copying by members of the public at their place of business, according to the IRS.

In general, any organization that files a Form 990... must make its three most recent Form 990's and its Form 1023 available for public inspection without charge at its principal place of business,' reads the Center's website.

'All parts of the return, schedules and attachments must be made available during regular business hours at the organization's principal office and at any regional offices having 3 or more employees.

There is an exception to the requirement if a non-profit chooses to make the documents widely available by posting them on the internet.

The anonymous email address that cited the policy of having a secret board, and the media contacts listed on the press release announcing the merger between RWJ and Barnabas, have not responded to questions about whether their healthcare organization is in compliance with the IRS rules regarding making the forms available to the public.

This obviously also is a remarkable rebuff to those in health care who advocate maximum transparency.

A Futile Attempt at Secrecy

Some good investigative reporting by New Brunswick Today penetrated the flimsy veil set up by hospital system leadership. The system chairman turns out to be one Jack Morris:

Documents provided by the NJ Department of Treasury show that controversial developer Jack Morris was made the Chairman of the RWJ Barnabas board.

Morris is a close friend and ally of former State Senate President and convicted felon John Lynch, Jr., who ruled New Brunswick as Mayor from 1978-1990, and some contend still is a key player in statewide politics.

Morris had previously served as Chairman of the Robert Wood Johnson University Hospital (RWJUH) Board of Directors. Morris is also tied to Cooper Hospital Chairman George Norcross, the state's most notorious unelected political boss.

The vice-chairman is actually Marc Benson.

another real estate mogul was named the RWJ Barnabas board's Vice Chair, according to the documents, which were filed with the State Treasurer in November 2015, nearly half a year before the merger was finalized.

Marc Berson founded the Millburn-based 'Fidelco Group' in 1981, a 'private investment owner-developer of residential, commercial, retail, and industrial properties in New York, New Jersey, Florida and Ohio,' according to a press release announcing his election as Chairman of the Barnabas Health Systems board in 2014.

It is certainly striking that a big non-profit hospital system would try to conceal the membership of its board of trustees. One might think the leadership should be proud of the board members, and the board members would be happy to advertise their community service.

This did not seem to be the case here. Once more we see how the new overlords of health care reflexively seem to choose secrecy over transparency, deliberately creating the anechoic effect which we have frequently discussed.

Perhaps the board wanted to avoid undue attention to the political connections of its new chairman, one of which was to a"convicted felon," and another of which was to Mr Norcross, whose apparent conflicts of interest in his role in the governance of a former UMDNJ hospital were discussed here. Parenthetically, an article in NJ.com on the merger noted that this new hospital system is a descendant of the now dissolved University of Medicine and Dentistry of New Jersey, UMDNJ (look here), an organization whose extensive troubles kept Health Care Renewal very busy in past years.

Perusing the list of the members of the board reveals two people with pharmaceutical connections that could be conflicts of interest, a few people with health care affiliations, but no obvious affinity for the patients and public in New Jersey whom the new hospital system is supposed to serve, and many lawyers and business people with no obvious affinity for the values of health care professionals.

the board of directors have three primary legal duties known as the 'duty of care,' 'duty of loyalty,' and 'duty of obedience.'

...

In sum, these legal duties require that nonprofit board members:

Take care of the nonprofit by ensuring prudent use of all assets, including facility, people, and good will; and provide oversight for all activities that advance the nonprofit’s effectiveness and sustainability. (legal 'Duty of due care')

Make decisions in the best interest of the nonprofit corporation; not in his or her self-interest. (legal Duty of loyalty')

Ensure that the nonprofit obeys applicable laws and acts in accordance with ethical practices; that the nonprofit adheres to its
stated corporate purposes, and that its activities advance its mission. (legal 'Duty of obedience')

So it is not obvious that these board members are particularly familiar with the nuances of the mission of a large academic hospital system, which includes delivering excellent patient care that puts individual patients first, particularly ahead of board members' self interest, and of its academic role, seeking and disseminating the truth. One wonders what sort of governance this sort of board will provide. Maybe the hospital leadership wanted to forestall such questions by keeping board membership as obscure as possible.

Speaking of the anechoic effect, while the new RWJ Barnabas Health system will be a very major player in NJ health care, and while trying to keep the board members of a non-profit health care system is rather a remarkable action, so far, only one local newspaper, and now your humble blogger seem interested. This is yet another example of the anechoic effect.

Comments

We have been writing now for a long time about the tremendous and growing dysfunction of US health care. Some now obvious reasons for its problems are poor leadership of ever larger and more powerful health care organizations, and failure of existing governance bidues to exercise stewardship over these organizations. We have discussed numerous previous problems with boards of trustees of non-profit health care organizations here. We have noted that board member may have conflicts of interest, and are often rich business executives who may be more interested in preserving the power and wealth of their fellow executives, including those generic managers who know often run large health care organizations, than defending vulnerable patients. These problems are compounded by the anechoic effect: information and opinions which might offend those currently in power and who stand to benefit most from the current system is kept very quiet, treated as a taboo subject, that is, made to have no echoes. This new case again suggests that these problems are not going away.

How many times must we say this?.... True US health care reform would vastly increase transparency, not just of prices, but of leadership and governance. True US health care reform would put the operation of US health care
organizations more in the hands of people who have knowledge and
experience in health care, and are willing to be transparent and accountable to support
health care professionals' values. Furthermore, oversight and
stewardship of these organizations should represent the patients and
public which the organizations are supposed to serve.

Monday, May 02, 2016

Despite recent attempts at health care reform, US health care dysfunction seems to proceed inexorably with ever rising costs, and continuing problems with access and quality. A likely reason is that those who find the current system personally profitable are in a position to resist real reform. The people who seem to gain the most from the status quo are top hired executives of big health care organizations.

Even more interesting are stories that show massive compensation of executives despite their hospitals' apparent poor performance. Since October, 2015, we also found the following (in chronological order)

Let Go After "Uneven Financial Performance," CEO of Kaleida Health Got $1.6 Million of Severance in One Year, with More to Come

In November, 2015 the Buffalo (NY) New reported that James R Kaskie, the CEO of Kaleida Health, the "largest healthcare provider in Western New York," per its website, was "forced out" when

the board cited a need for a change in leadership amid an uneven financial performance for the system....

Nonetheless,

Kaleida Health paid $1.6 million in 2014 to its former CEO, James R. Kaskie, after forcing him out early last year, according to its most recent federal regulatory filing.

Also,

Kaleida will pay Kaskie 24 months of severance under the terms of Kaskie’s employment contract with the system, John R. Koelmel, chairman of the Kaleida board, told The Buffalo News on Thursday.

Kaskie was paid 10 months of severance plus deferred compensation, which is the $1.6 million reflected in the latest regulatory filing. He will be paid 12 months of severance in 2015 and a final two months of severance in 2016.

Mr Kaskie was paid even better the year before:

Kaskie earned $1.9 million in 2013, his last year as CEO.

Furthermore, other executives who were let go after Mr Kaskie's departure also were very well paid,

Dr. Margaret W. Paroski, former executive vice president and chief medical officer, who was replaced by Lomeo after he took over as CEO last year, $763,552.

Joseph M. Kessler, former executive vice president and chief financial officer, who was replaced by Lomeo, $608,454.

The article explained that

Hospitals, corporations and other entities negotiate severance agreements as part of the employment contracts when they hire top executives

So not only to these executives earn top dollar, but their earnings continue even if they lose their jobs because of poor performance. When asked to explain these levels of remuneration, and contracts that allow executives to get continuing pay even after being "forced out" for "uneven financial performance," John R Koelmel, the chairman of the system's board, said

Companies pay at market. To recruit the best talent, you need to pay at least market.

Public Hospital MetroHealth Medical Center Scored Below Average on Patient Satisfaction and Quality, but CEO Got $1.1 Million

'We have to have a target in terms of financial performance because if you don't make the money you can't be in business,' said Silvers.

In Massachusetts, "As Hospital Profits Fall, Executive Pay Soars"

In April, 2016, the Lowell (MA) Sun published a long report on local hospital executive compensation. It started

It has been a lean couple of years for the region's hospitals.

Drawn by the higher reimbursement rates that insurers pay to academic teaching hospitals, such as those in Boston, more physicians are affiliating themselves with those institutions. Patients are following, and so is the money.

Some community hospitals, including Lowell General Hospital and Emerson Hospital in Concord, saw profit margins drop by more than half from 2012 to 2014.

Other hospitals' financial indicators, like ratios of assets to liabilities, are also weakening,...

However,

As they look to weather those storms and protect their space in a rapidly changing health-care landscape, the boards of directors of the region's hospitals have doubled down on a key investment: their executives.

'Each organization has to make its own decisions about how it can best compete in the marketplace,' said Gary Young, director of Northeastern University's Center for Health Policy and Healthcare Research.

Senior executives of hospitals and health-care systems -- there's a competitive market for that kind of talent ... some would say when organizations run into trouble, they need to spend more to get leaders.'

So,

At Lawrence General Hospital, compensation paid to top non-physician administrators increased 41 percent from 2012 to 2014, according to tax documents. President and CEO Dianne Anderson, who heads the list, was paid a total package of $884,092 in 2014.

Also,

From 2012 to 2014, Lahey Health's non-physician executives saw a compensation increase of 36 percent. A large part of that increase was in the salary of Dr. Howard Grant, who was promoted from president and CEO of Lahey Clinic to president and CEO of the entire Lahey Health system. The system includes facilities throughout northeastern Massachusetts and southern New Hampshire. Grant received $1.7 million in 2014.

In addition,

Lowell General Hospital's executives saw a slightly smaller increase during that three-year span, at 18 percent, although CEO Normand Deschene remains the highest-paid hospital executive in the region with a package worth $1.9 million in 2014. The hospital also pays the taxes on retirement benefits, which are worth hundreds of thousands of dollars, for Deschene and several other executives.

The justifications for these increases in times of financial trouble were similar. For example, re Lawrence General Hospital,

'Because we're resource-limited, compared to (academic) hospitals, we're even more dependent in these challenging times to bring in somebody who can manage risk,' said Richard Santagati, chairman of Lawrence General's executive compensation committee. 'It takes a different breed and there's real competition for these people ... and once you have them there, you want to keep them because there's a learning curve there that is unique to each hospital.'

Re Lahey Clinic,

'Our executive compensation is comparable to the programs of other, similarly sized health networks and is reflective of the complex role of an executive leader at a leading health system,' Lahey Health said in a statement.

Finally, at Lowell General Hospital, the CEO defended his own pay:

'Lowell General has weathered significant changes in the delivery of health care,' Deschene said. 'At a time when many hospitals have failed, it's very crucial and critical that we have very talented individuals to lead the hospital.'

The Usual Talking Points Again Invoked

Hospital management used the usual talking points to justify the pay they received, As I wrote last year

It seems nearly every attempt made to defend the outsize compensation
given hospital and health system executives involves the same arguments,
thus suggesting they are talking points, possibly crafted as a public
relations ploy. We first listed the talking points here, and then
provided additional examples of their use.
here, herehere,here, here, and here, here and here.

They are:
- We have to pay competitive rates
- We have to pay enough to retain at least competent executives, given how hard it is to be an executive
- Our executives are not merely competitive, but brilliant (and have to be to do such a difficult job).

It appears that those justifying huge executive payments have all been handed these same talking points.

Yet none of them quite make sense. The brilliance argument is particularly suspect in cases like those above of CEOs whose hospitals' performance was clearly not brilliant according to the metrics supposedly used to judge them.

When confronted with an outburst of public anger over massive corporate pay for a privileged few, a common response of the libertarian right is to invoke the economics of the free market.

Such spectacular rewards, we’re informed, are delivered by individuals selling their labour in a free market. And because such pay levels were set through this natural process, no one has the moral right to question them. Further, to interfere with such natural processes would be economically inefficient, making us all worse off in the end.

Such contentions are based on

a venerable economic theory [that is] behind this kind of reasoning. At the end of the 19th century, the American economist John Bates Clark hypothesised that in a perfectly competitive economy, demand for labour is determined by its 'marginal productivity' and wage rates are determined by the 'marginal product' of labour.

To translate, if a firm can make a profit by adding another worker to its payroll, it will do so. And the amount a firm will be willing to pay for that labour in wages will be determined by the additional profit the individual worker adds to the company’s bottom line. So if a worker adds a lot of profit, he or she can command a lot of compensation. But if they add only a little profit, he or she will get only a little. This means people with low personal productivity get small amounts. But people with high personal productivity (chief executives for instance) receive big bucks.

For a start, how does a company know what the marginal product of an individual worker is, or will be? This isn’t something that is directly measurable. The vast majority of us work in teams; how is it possible for management to determine our individual contribution to the financial success of that team, or of that team to the company? How can a business know how much of the profit added was due to the individual’s particular skills? The conditions necessary for the Clark theory that everyone gets what they 'deserve' don’t exist.

But isn’t the marginal product of bosses, who make big strategic decisions, easier to measure? The ASI cites the late Steve Jobs of Apple as an employee who was clearly worth a lot. However, there are plenty of other chief executives whose individual contribution is impossible to measure. Yes, the company’s share price might have gone up. But was this because the boss was smart? Or just lucky?

Furthermore,

The economist Dani Rodrik, in his latest book Economics Rules, argues that such broad theories of income distribution by the market are best viewed as intellectual 'scaffolding', adding: 'They are shallow approaches that identify the proximate causes but need to be backed up with considerable detail'.

And there are other theories of wage determination that are likely to be relevant. One important one is bargaining theory. This suggests that those who have political power within a firm can extract more than those without it. Maybe the reason chief executives tend to get paid ever growing multiples of the pay of the average worker is not because they are 'worth it' but because they are powerful. As the economist JK Galbraith put it: 'The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.'

The Dangers of Pay for Performance

In a February, 2016, article in the Harvard Business Review, Cable and Vermeulen challenged the dogma that managers' (and in health care, physicians' and other professionals') pay should largely be based on "performance."

performance-based pay can actually have dangerous outcomes for companies that implement it.

They cited five points based on at least some research evidence to back up their contention.

1. Contingent pay only works for routine tasks. Companies should abolish contingent pay for their top executives because theirs is the least appropriate job for it. Decades of strong evidence make it clear that large performance-related incentives work for routine tasks, but are detrimental when the tasks is not standard and requires creativity.

***

2. Fixating on performance can weaken it. The goal of most executive incentive plans is to focus leaders on hitting goals and achieving outcomes. After all, that’s why it’s often called performance-based pay.' But as researchers have found, if you want great performance, performance is the wrong goal to fixate on.

Several studies have shown that when employees frame their goals around learning (i.e., developing a particular competence; acquiring a new set of skills; mastering a new situation) it improves their performance compared with employees who frame their work around performance outcomes (i.e., hitting results targets; proving competence; seeking favorable judgments from others).

***

3. Intrinsic motivation crowds out extrinsic motivation. When people feel intrinsically motivated, they do things because they inherently want to, for their own satisfaction and sense of achievement. When people are extrinsically motivated, they do things because they will receive bigger rewards. The goal of contingent pay is to increase extrinsic motivation – but intrinsic motivation is fundamental to creativity and innovation.

***

4. Contingent pay leads to cooking the books. When a
large proportion of a person’s pay is based on variable financial
incentives, those people are more likely to cheat. In academic terms, we
would put it this way: extrinsic motivation causes people to distort
the truth regarding goal attainment.

When people are largely motivated by the financial rewards for
hitting results, it becomes attractive to game the metrics and make it
seem as though a payout is due. For example, different studies have
shown that paying CEOs based on stock options significantly increases
the likelihood of earnings manipulations, shareholder lawsuits, and product safety problems.
When people’s remuneration depends strongly on a financial measure,
they are going to maximize their performance on that measure; no matter
how.

***

5. All measurement systems are flawed. Incentive plans
demand that some metric be used as the trigger for a payout. The problem
is that whatever package you construct – bonds, stocks, or bonuses –
whatever performance criteria you decide on will be imperfect. For a
complex job such as senior management, it is simply not possible to
precisely measure someone’s “actual” performance, given that it consists
of many different stakeholders’ interests, tangible and tacit
resources, and short- and long-term effects. Even with HR executives
clamoring for enhanced “people analytics” (and technology companies
bending over backwards to deliver them) any measure you choose is going
to be an inadequate representation of how you would like your CEO to
behave.

Note first that these points suggest that the increased use of performance based pay for health care organizations' top managers may explain why many health care organizations actually perform so badly, and point 4 may help explain why pay for performance may actually help increase health care corruption.

Note further that pay for performance (P4P) for health care professionals has been strongly pushed by many health policy experts, yet all these points also seem applicable to that usage.

Conclusion - Change Will be Resisted

So even when non-profit hospitals and hospital systems perform poorly, their executives continue to receive ever greater remuneration. The executives, their public relations flacks, and their often compliant boards of trustees continue to cite the same stale talking points to justify their pay. Yet these talking points are based on market fundamentalist theory and business school dogma whose credibility is increasingly challenged. In the absence of anyone willing to confront them with these criticisms, the apologists for soaring health care executive pay continue to prattle their tired talking points.

Meanwhile, as corporate governance expert Robert A G Monks said in a 2014 interview,

Chief executive officers' pay is both the symptom and the disease.

Also,

CEO pay is the thermometer. If you have a situation in which,
essentially, people pay themselves without reference to history or the
value added or to any objective criteria, you have corroboration of... We haven't fundamentally made progress about management
being accountable.

Moreover, top health care executives' power to make warm personal gestures to themselves correlates with the ability to defend this power, per Mr Monks,

People with power are very reluctant to give it up. While all of us
recognize the problem, those with the power to change it like things the
way they are.

So I expect that many hospital and health system CEOs, like leaders of other big health care organizations, may talk about health care reform, but will avoid talking about, and will likely oppose attempts at real reform using their command of their organizations' marketers, public relations flacks, lobbyists, and lawyers.

We need true health care reform that would enable leadership
that understands the health care context, upholds health care
professionals' values, and puts patients' and the public's health ahead
of extraneous, particularly short-term financial concerns. We need
health care governance that holds health care leaders accountable, and
ensures their transparency, integrity and honesty. What we will get is endless resistance to such reform from those who personally profit from the current dysfunctional, and increasingly corrupt system.

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